Should I buy a car that’s new or used?

Thinking about buying a car can be a little unsettling for everyone. There are so many factors to consider, like the model, the brand, and of course, the price tag. The decision will affect your finances for years to come, since cars are downright expensive. Thus, it’s not something you’ll want to do on a whim. However, it doesn’t have to be stressful either. The best way to go about car-buying is to weigh out the pros and cons, which includes whether to buy new or used...

The Advantages of a New Car

A new car’s price tag is undeniably expensive however you’ll get what you paid for...

Perfect condition

One of the best parts of having a new vehicle is the obvious – It’s never been used. You won’t have to worry about who you’re buying from or how they drove the car. You can rest assured that you’re getting the car in perfect condition, or so they say!

High-tech features and upgrades

New cars are by definition, way more high-tech than used cars. One thing, we can count on in this world, is technology growing faster than weeds. You’ll be guaranteed the latest and greatest in safety features and entertainment. Did anyone say Bluetooth? Or “lane keep assist”? This safety automation actually detects when your car is unintentionally veering out of its lane. It then sends out steering inputs that nudge the driver to keep centered. New cars are also way more likely to be fuel-efficient, since they have to meet the EPA’s increasingly strict standards. This will save you a lot on gas.

Warranty

When you buy a car new, you also get a warranty. Repairs are easily the biggest long-term car expense you’ll face however if your car is under warranty, repairs won’t break your bank. If you’re seriously considering a new car, one of the first things you’ll want to check is the attractiveness of the warranty…

Most warranties cover your car against damages for up to four years however some manufacturers will also include unlimited mileage. Another warranty to look out for is the power train warranty. The power train houses the cars most essential parts, like the axles, engine, differentials, drive shaft, transfer case, and the transmission. You may want to consider some of the leaders in power train warranty, like Tesla and Mitsubishi.

Loans and rebates

Getting a loan on a new car is easier and the interest rates are lower, since the financer faces less risk. There’s little chance of the resale value of the car ever dropping below the owed amount. Even if a car buyer defaults on their loan, the financer will be able to auction off the car, for a price that’s higher than the unpaid balance. Apparently, this isn’t always the case with used cars, since sometimes, the value of the car drops below the balance remaining on the loan.

New cars also include rebates. You can check to see which companies are experiencing sales slumps on any given year for rebates. For example, Toyota began a major recall in 2009, since they had a gas accelerator malfunction that lead to at least 30 deaths. It was the costliest recall in car history and Toyota sales plummeted. They ended up issuing out massive rebates to get people inside their showroom, so anyone purchasing a Toyota around this time would have done so at a massive discount.

High insurance costs: Myth

You might hear that newer cars cost more to insure but this isn’t true. Insurance companies base their prices on other things, like the make, model, theft, and safety. For instance, various models attract certain drivers. Anyone in a sports car, like a 2015 Ford Mustang, is perceived as more likely to speed than someone in a leisure car, like the 2018 Volkswagen Golf. The sports car driver pays higher insurance premiums, despite owning a newer car.

The likelihood of car theft is also a factor. Thieves are more likely to go after cars that have parts that haven’t changed much over the years, as well as cars whose parts are in high demand. Apparently, used Toyota Camry’s 90’s models have relatively high insurance rates, since they’re popular among thieves.

Safety features also decrease the cost of insurance, since the perceived risk of accident is lower. Bottom line is that insurance rates are based on a number of things and the car’s year, really isn’t one of them.

The Disadvantages of a New Car

An obvious disadvantage of a new car is lack of affordability…

Expensive price tag

Nothing is free in this world and certainly nothing that’s new. The biggest problem with new cars is that they’re expensive. Manufacturers know that buyers will pay a premium for new cars, since they’re the highest quality the market has to offer. It’s not uncommon for people to get a payment plan, since they cannot afford the car upfront.

Instant depreciation

No new car buyer will ever sell their car for higher than what they originally paid. It’s common knowledge that depreciation begins as soon as the car is driven off the lot. Apparently, the car depreciates an immediate 11% and then continues to depreciate up to 60% over the first five years. Car buyers should be sure of their decision, since financially speaking, there’s no turning back.

The advantages of a used car

A used car comes with more advantages than you might realize...

Cheap price tag

As you just read, cars depreciate dramatically, which benefits used car buyers. Even if the car you’re buying has only been used a year, it’s depreciated at least 20%. This saves you thousands of dollars. You’ll also be able to price hunt, since there will be many different dealerships, all competing to sell the same cars. There are useful online sites, like CarGuru, that show you whether your car of interest is selling above or below market value.

Reviews

When you buy used, you’re at an advantage, since you can review how the car performs over time. You’ll be able to see what car parts are likely to malfunction and gauge the maintenance costs. You can also see what people liked and didn’t like about the model. Another benefit is that you’ll be able to avoid any models that have recalls.

One-way insurance

If you don’t end up spending too much on your used car, say less than $5000, you can consider one-way insurance. This only covers damages done to another person’s car, rather than two-way insurance, which also covers your car. One-way insurance is half the price of two-way, which saves you hundreds of dollars each year.

Disadvantages of used cars

Beware of some of the problems that accompany used cars...

Car problems

Used cars are more likely to have problems, like damage and liens. You’re at risk when you buy from individual sellers, since some try to sell cars with liens. Once the car’s been registered, you’d officially become the new owner of the debt. It’s safer to buy from a certified seller. The dealership checks out the vehicle’s official history report and then makes sure that there’s no lien. The report also covers any accidents history and unfixed safety recalls. The certified seller also makes sure that the car meets safety standards. Thus, you’ll get a relatively good car.

No warranty

Chances are that if you’re buying used, the warranty on the car has expired, and you’ll become solely responsible for any repairs. These turn into a major expense. You can always check to see if your car is covered under its original warranty, since it’s sometimes possible to have it transferred. Most manufacturers that allow transfer of warranties have specific criteria, like it only applies to private sales. Apparently, that’s the case with Mercedes.

Limited options

When you’re searching for used vehicles, you’ll have to accept the fact that the specific car make, model, and year may not be available. Even if it is, it might not have the specific trim that you’re looking for. The best way to shop for a used vehicle is to set out some criteria, like the desired manufacturer, the year range, and the price range, and then to keep an open mind. You’ll want to be a little picky but if you’re too picky it might be years before you ever find your perfect car.

Conclusion

While there are more benefits to buying a brand new car, a used car is the best option for most. No matter which way you decide to go, you’ll want to get the most out of the car, without stress. Always consider the price tag, the insurance costs, and the warranty, since these three things can greatly influence cost. If you’re buying used you’ll also want to check the vehicle history report, the reliability rating, and the mpg. Best case scenario is that you find the car that’s perfect for you and your life becomes a breeze – Pretty good, right.